Correlation Between Chia Yi and Arima Communications
Can any of the company-specific risk be diversified away by investing in both Chia Yi and Arima Communications at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Chia Yi and Arima Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chia Yi Steel and Arima Communications Corp, you can compare the effects of market volatilities on Chia Yi and Arima Communications and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Chia Yi with a short position of Arima Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia Yi and Arima Communications.
Diversification Opportunities for Chia Yi and Arima Communications
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Chia and Arima is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Chia Yi Steel and Arima Communications Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arima Communications Corp and Chia Yi is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Chia Yi Steel are associated (or correlated) with Arima Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arima Communications Corp has no effect on the direction of Chia Yi i.e., Chia Yi and Arima Communications go up and down completely randomly.
Pair Corralation between Chia Yi and Arima Communications
Assuming the 90 days trading horizon Chia Yi Steel is expected to generate 0.29 times more return on investment than Arima Communications. However, Chia Yi Steel is 3.46 times less risky than Arima Communications. It trades about -0.02 of its potential returns per unit of risk. Arima Communications Corp is currently generating about -0.07 per unit of risk. If you would invest 1,105 in Chia Yi Steel on October 22, 2024 and sell it today you would lose (5.00) from holding Chia Yi Steel or give up 0.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Chia Yi Steel vs. Arima Communications Corp
Performance |
| Timeline |
| Chia Yi Steel |
| Arima Communications Corp |
Chia Yi and Arima Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chia Yi and Arima Communications
The main advantage of trading using opposite Chia Yi and Arima Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chia Yi position performs unexpectedly, Arima Communications can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Arima Communications will offset losses from the drop in Arima Communications' long position.| Chia Yi vs. STL Technology Co | Chia Yi vs. Genovate Biotechnology Co | Chia Yi vs. Asmedia Technology | Chia Yi vs. Great China Metal |
| Arima Communications vs. Silitech Technology Corp | Arima Communications vs. Merry Electronics Co | Arima Communications vs. Cheng Uei Precision | Arima Communications vs. Wistron NeWeb Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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